In econometrics, the difficulty in regressing an equation when too many variables change. For example, if a good's supply changes but demand does not, one can devise an estimation of the demand at a particular price. However, this is difficult if both supply and demand change.
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identification problemthe difficulty encountered in attempting to analyse the variables that affect demand when simultaneous changes in demand and supply conditions are experienced. Empirical data on prices and quantities of a product traded cannot easily be used to identify a DEMAND CURVE for that product when product demand and product supply are both changing.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005